The Latest Builder Trend: Smaller, Less Expensive Homes

The Latest Builder Trend: Smaller, Less Expensive Homes

While affordability is improving, buying a home can still feel challenging. Here’s some good news: builders are increasingly focusing on constructing smaller homes and offering key incentives to buyers. Both of these factors can be very helpful if you're concerned about finding a home that fits your budget.

Builders Are Building Smaller Homes 

During the pandemic, homebuyers sought larger homes—and many had the budget for them. Builders responded by creating bigger spaces to accommodate needs like remote work, home gyms, and additional rooms for virtual schooling.

Now, with affordability being a major concern, builders are shifting their focus to smaller single-family homes. Data from the Census reveals how significant this trend toward smaller new homes has become over the past couple of years (see graph below):

Builders are focusing on smaller homes right now because they want to meet current market demand. The primary concern for homebuyers is affordability, and smaller homes usually come with lower price tags. As a result, both buyers and builders are shifting their attention to homes with less square footage. The National Association of Home Builders (NAHB) reports:

 “. . . home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago.” 

And according to Orphe Divounguy, Senior Economist at Zillow:

“Not only are cash-strapped buyers continually seeking out lower-cost options, but developers are changing what type and size of home they're producing to try and meet that need." 

How a Newly Built Home Can Help You Achieve Your Homebuying Goals

If you're struggling to find a home within your budget, it might be worth considering brand-new homes with a smaller footprint. This option could come with additional benefits that enhance affordability, such as price reductions or mortgage rate buydowns.

According to the latest data from Zonda, over half of builders are offering incentives, including mortgage rate buydowns. These perks could help reduce your future monthly housing payment as well. John Burns, CEO of John Burns Research & Consulting, shares:

“The monthly payment matters more than anything else and builders have responded with smaller, more efficient homes.”

Additionally, with new home construction, you'll benefit from brand-new everything, reduced maintenance needs, and access to the latest features. That’s definitely worth considering, right?

Bottom Line

With builders prioritizing smaller homes, you might find more budget-friendly options when you need them most. If you're considering buying a home soon, let’s connect and explore what’s available in your desired area.